Income-share agreements,” or ISAs, fund a portion of educational costs in exchange for a percentage of a student’s earnings over time. Many ISA providers argue that their “innovative” products are not loans even though they lend money and subsequently require repayment, employing an old and predatory tactic that loan providers use to evade consumer protection guardrails. In fact, ISAs are simply high-cost loans that currently lack even the protections afforded to private student loans, which themselves are a worse option than federal student loans for most borrowers. The high cost of ISAs often results in unmanageable repayment burdens, and discriminatory impacts on women and people of color. At this presentation, we will give an overview of the ISA model and industry landscape and provide recommendations for how states can ensure their students are not harmed by these products.
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